Sunday, June 26, 2005

On its website, Simpay announces:Following the decision of one of its founding Members not to launch Simpay for the foreseeable future, the decision was made today at a General Meeting of Simpay not to pursue its activity on a pan-European scale as originally planned. Instead, Simpay’s operations will be scaled back with immediate effect. Member operators will be able to exploit Simpay’s intellectual property rights at a national level, although international interoperability remains a goal. The members will make known their individual plans in due course.

All of the operators involved in Simpay continue to share the vision of the enormous potential of the mobile commerce market and the importance of providing a robust and straightforward payment facility to content providers.

In other words:Mobile operators make money by exploiting their own quick-and-dirty payment mechanisms and (inter)national roaming agreements for the interoperable use of these instruments. With Simpay they found out what it would cost to build and operate a system that really accounts for all transactions. Also, they may have started to discuss interchange fees for Simpay, the applicable Regulation 2560 as well as the future legal framework for payments in the European Market.

The conclusion could then well have been that they are far better of with the current grey-area, less-visible payment arrangements than with a formal payment processor that has no business case to work on. The benefit: more income from payments business while maintaining less visibility and transparance.

What's interesting is that EU-regulators keep on telling the banks that they should do what telco's do. If the telco's can do it, why can't banks? Furthermore the EU DG Internal Market is keen on having banks deliver panEuropean payment mechanisms.

Let's see what the repercussion is of the Simpay decision. This can go two ways:1. If telco's can't deliver coordinated panEu payment products beyond what they already have, banks should also stop trying to deliver EPC2. If banks are held to deliver EPC, telco's must be held to deliver Simpay for all customers and merchants in Europe

Or would the Commission now say that the analogy with mobile operators is no good after all?